Sep

29

Editor's Note: We do not usually publish material from other sites. But we thought this scintillating review from Michael Covel, a unique and pleasantly surprising source, is so good it is worth republishing.

A friend recently invited me to a private screening of Michael Moore’s new film Capitalism: A Love Story. The September 16th invite not surprisingly leaned a certain direction:

“[Michael] Moore takes us into the homes of ordinary people whose lives have been turned upside down; and he goes looking for explanations in Washington, DC and elsewhere. What he finds are the all-too-familiar symptoms of a love affair gone astray: lies, abuse, betrayal and 14,000 jobs being lost every day. Capitalism: A Love Story…is Michael Moore’s ultimate quest to answer the question he’s posed throughout his illustrious filmmaking career: Who are we and why do we behave the way that we do?”

Considering Moore was going to be there for a Q&A after (moderated by Arianna Huffington), I quickly signed on. Now before painting a picture of Moore’s new film let me be honest: my belief set is essentially libertarian (‘Government out of my bedroom and my pocketbook’). Not only do government solutions not excite me, they scare the living blank out of me. Remember when George Bush declared, “I’ve abandoned free-market principles to save the free-market system…to make sure the economy doesn’t collapse”? He might as well of said, “Hide your money, kids – ’cause I’m coming to take it!”

Oh sure, in theory I would like to see everyone with their own homestead, money in their pocket for regular shopping frenzies and no health worries despite eating at Burger King 24/7, but arriving at those goals is not exactly doable unless government robs Peter to pay Paul and or starts up the printing press.

And that view of course puts me in opposition to Moore since he has no problem with government as his and our father figure. That is his utopia. He truly believes warehouses of Washington, DC-based federal workers remotely running our lives is the optimal plan. He is an unapologetic socialist who really doesn’t care why the poor are poor or the rich are rich, he just wants it fixed. So not surprisingly, and with some generalization as I proffer this, Democrats like Moore and Republicans don’t.

However, I was excited to see a ‘mainstream’ film that was backed by big Hollywood bucks conclude capitalism as ‘evil.’ Arguably the most successful documentarian ever, a man who has made untold millions of dollars, was going to legitimately make the case that there was an alternative to capitalism. I sat down in a packed Mann’s Bruin Theater in Westwood, CA eager to see how his vision could possibly flesh out.

Moore is a rather simple guy. He is likable. He sees the world as good guys (people with no money) and bad guys (people with money). His Flint, Michigan union worker upbringing is his worldview. If you did not have that upbringing or if your life started less severe than his you are an evil capitalist. If on the other hand you were a laid off factory worker with a sixth grade education you are the true hero. I don’t care one way or the other that he has that view and I am not knocking union workers, but Moore sees the world through a class warfare lens resulting in a certain agenda: force wealth to be spread amongst everyone regardless of effort. Within minutes it was clear where Capitalism: A Love Story was headed. The ‘highlights’ included:

* We listen to heartbreaking stories of foreclosed families across America, but we don’t learn why the foreclosures happened. Did these people treat their homes as piggy banks? Were there refis on top of refis just to keep buying mall trinkets and other goodies with no respect to risk or logic? We don’t find out.

* We meet one family who was just foreclosed on so desperate for money that they were willing to accept $1,000 for cleaning out the house that they were just evicted from. Was it sad? Yes. But, should we end capitalism due to this one family in Peoria, IL?

* We are introduced to a guy whose company is called ‘Condo Vultures’ buying and selling foreclosed properties. Since he acted like a used car salesman, the implication was that he was an evil capitalist. However, Moore doesn’t tell us if his buyers were ‘working class’ people making smart buying decisions after prices had dropped.

* We listen to Catholic priests who denounce capitalism as an evil to be eradicated. What they would put in its place and how would the new system work? The priests don’t tell us.

* We learn that Wal-Mart bought life insurance policies on many workers. We are then told to feel outrage when Wal-Mart receives a large payout from an employee death while the families still struggle with bills. I saw where Moore was heading here, but this was a reason to end capitalism?

* We hear a story from a commercial pilot so low on money that he has to use food stamps. Moore points out that many pilots are making less than Taco Bell managers and then attributes a recent plane crash in Buffalo to underpaid pilots. This one crash is extrapolated out as yet another reason to end capitalism.

I was pleasantly surprised at Moore’s attempt at balance. For example, he included:

* A carpenter, while ply-wooding up a foreclosed home, says, “If people pay their bills, they don’t get thrown out.”

* A dressing down of Senator Chris Dodd (D) by name. Moore calling out a top Democrat? He sure did. He nailed him.

* A lengthy dissertation on the evils of Goldman Sachs. He rips Robert Rubin and Hank Paulson big time and I agree with him. In fact, I said to myself, “Moore you should have done your whole film on Goldman Sachs!”

Throughout the various stories and interviews he also weaves a conspiracy (all Moore films do this). The plot goes something like this: America won World War II and quickly dominated due to no competition (Germany and Japan were destroyed). We had great post-war success where everyone lived in union-like equality. Jobs were plentiful and families were happy. However, things start to go bad in the 1970s, and Moore uses a snippet of President Carter preaching about greed. This clip was predictably building to Moore’s big reason for all problems today: the Reagan revolution.

Moore sees Reagan entering the scene as a shill for corporate banking interests. However, everyone is happy as the good times roll all the way through into Clinton times. Moore does take subtle shots at President Clinton, but nails his right hand economic man Larry Summers directly as a primary reason for the banking collapse. So, while Moore sees Japan and Germany today as socialistic winners where corporations benefit workers more than shareholders, he sees America sinking fast.

So is that it? That was the proof that capitalism is an evil to eliminate? Essentially, yes, that’s Moore’s proof. What is his solution? Tugging on your idealistic heartstrings of course! Moore ends his film with recently uncovered video of FDR talking to America on January 11, 1944. Looking into the camera a weary FDR proposed what he called a second Bill of Rights – an economic Bill of Rights for all regardless of station, race, or creed that included:

* The right to a useful and remunerative job in the industries or shops or farms or mines of the nation.
* The right to earn enough to provide adequate food and clothing and recreation.
* The right of every farmer to raise and sell his products at a return which will give him and his family a decent living.
* The right of every businessman, large and small, to trade in an atmosphere of freedom from unfair competition and domination by monopolies at home or abroad.
* The right of every family to a decent home.
* The right to adequate medical care and the opportunity to achieve and enjoy good health.
* The right to adequate protection from the economic fears of old age, sickness, accident, and unemployment.
* The right to a good education.

As FDR concluded and the film ended, I was shocked at the reaction. The theater of 400+ stood and cheered wildly at FDR’s 1944 proposal. The questions running through my head were immediate: How does one legislate words like “useful”, “enough”, “recreation”, “adequate”, “decent”, and “good”? Who decides all of this and to what degree? At past points in history to voice an opposition opinion in the middle of such a single-minded herd would have certainly been my physical demise! Interestingly, during the Q&A Huffington and Moore discussed bank failure fears during the fall of 2008. They asked for a show of hands of how many people moved money around or attempted to protect against a bank failure. I had the only hand that went up.

FDR’s plan hauled out by Moore six decades after it was forgotten reminded me of another interchange – this one from the 1970s. Then talk show master, the Oprah of his day, Phil Donahue was interviewing free market economist Milton Friedman and wanted to know if Friedman had ever had a moment of doubt about “capitalism and whether greed’s a good idea to run on?”

Friedman was quick in response, “…is there some society you know that doesn’t run on greed? You think Russia doesn’t run on greed? You think China doesn’t run on greed? The world runs on individuals pursuing their separate interests. The great achievements of civilization have not come from government bureaus. Einstein didn’t construct his theory under order from a bureaucrat. Henry Ford didn’t revolutionize the automobile industry that way. In the only cases in which the masses have escaped from the kind of grinding poverty you’re talking about, the only cases in recorded history are where they have had capitalism and largely free trade. If you want to know where the masses are worst off, it’s exactly in the kinds of societies that depart from that. So that the record of history is absolutely crystal clear: that there is no alternative way so far discovered of improving the lot of the ordinary people that can hold a candle to the productive activities that are unleashed by a free enterprise system.”

Donahue (and the video of this on YouTube is classic) then countered saying that capitalism rewards the ability to manipulate the system and not virtue. Friedman was having none of it, “And what does reward virtue? You think the communist commissar rewards virtue? …Do you think American presidents reward virtue? Do they choose their appointees on the basis of the virtue of the people appointed or on the basis of their political clout? Is it really true that political self-interest is nobler somehow than economic self-interest? …Just tell me where in the world you find these angels who are going to organize society for us?”

Friedman’s logic was what I was remembering as a theater full of people cheered wildly for a second Bill of Rights. How did this film crowd actually think FDR’s 1944 vision could be executed? Frankly, it was clear to me at that moment capitalism was on shaky ground. Starting with Bush ‘abandoning’ capitalism to bailouts for everyone to Obama gifting away the future – we seriously might be past the point of no return toward a socialization of America.

Figuring someone else must see the problems with this film, I started poking around the net for other views. One critic declared that the value of Capitalism: A Love Story was not in the moviemaking, but in its message that hits you in the gut and makes you angry. This film did not make me angry, but it did punch me in the gut. The people in that theater with me were not bad people, including Moore. They just seem to all have consumed a lethal dose of Kool-Aid! And at the end of his Q&A Moore pushed the audience to understand that while they don’t have the money, they do have the vote. He implored them to use their vote to take money from one group to give it another group. Did he really say that openly with no ambiguity? Yes, sadly.

Greg Rehmke offers:

I enjoyed your description of the film. And it is great especially that you took the time to go see it and to write about it. One problem with ideological documentaries is that only people who already agree go to see them, just as with Fox News or the many ideological magazines and blogs. So most people hear only cherry-picked stories that support their biases and beliefs. I have a few quick notes on the "Second Bill of Rights – an economic Bill of Rights for all…" that see them through the lens of "freedom to" rather than "freedom from":

* The right to a useful and remunerative job in the industries or shops or farms or mines of the nation. [Rehmke comment: On first glance, this sounds like "freedom from" unemployment. But is can also be seen as calling for an economic right to launch industries, shops, farms, and mines. Few people today can succeed, either individually or as small teams, in getting permits to start any of these enterprises. The rich can because they have lawyers, tax accountants, contacts in state and local government regulatory agencies, and contacts with government-backed bankers. Corporate farming thrives on subsidies, pushing out family farms. Inner city entrepreneurs in Detroit need 70 permits for home-based businesses, etc. This is all the fruit is state-capitalism, and is the status quo for much of the economy. If the poor could legally provide transportation services to each other, that would create both a million more jobs and provide cheap transportation for poor people to nearby employment and social services.]

* The right to earn enough to provide adequate food and clothing and recreation. [Rehmke comment: Minimum wage laws and payroll taxes combine to make low-wage jobs generally hard to find for the low-skilled (because low-wage jobs are made expensive for employers). Technology innovation and fairly free trade has dropped the price of clothes so today's poor can afford what middle-income Americans in the 1940s could only dream of. Food is inexpensive too, even with all sorts of tariffs, taxes, and agricultural price supports. In 1944, single people lived with families or as borders. Inexpensive housing is also blocked by local zoning and building codes. If group housing, borders, and factory housing were not banned by most local zoning, the poor today would live much better on below-minimum wage jobs than middle-income Americans of the 1940s. "Average home size has doubled from the 1950s" yet most families are smaller.]

* The right of every farmer to raise and sell his products at a return which will give him and his family a decent living. [Rehmke comment: Well, the farmer should have the right to try, without being badgered by regulators. Farms and orchards in California, Oregon, and Washington require inexpensive and reliable workers, and many of these hard-working people are from Mexico. They are regularly harassed for not having adequate documentation to prove they have permits from the federal government to work in the U.S. as free and responsible human beings. (The Krieble Foundation guest worker plan would resolve end illegal immigration.) Without inexpensive labor, few family farms can survive, especially as farmers get older.]

* The right of every businessman, large and small, to trade in an atmosphere of freedom from unfair competition and domination by monopolies at home or abroad. [Rehmke comment: Governments create and maintain monopolies. State capitalism has created vast swaths of monopolistic professions across America. From doctors to electricians, hair stylists to legal advisors, teachers to nurses, transit drivers to bed & breakfast operators–expensive permits, government-sanctioned "training", dense regulations, and special taxes are the rule rather than the exception. Mercantilistic regulations make business services more costly, and restrict business opportunities to those how have skills not only to run a business, but also to navigate regulations usually erected by established competitors, plus complex tax codes and labor laws. Plus established competitors can often find a way to litigate new competitors out of business.]

* The right of every family to a decent home. [Rehmke comment: Again, freedom to build and live in homes would be helpful. Builders could construct 1944-size homes very, very inexpensively, if they were legally allowed to by local zoning boards and urban planners. Government has driven up the price of housing, prodded by elites already in comfortable homes and not wanting too many neighbors, especially poor ones. Randy O'Toole's book, Best Laid Plains, tells this sad story. Housing and land use regulations not only raise the cost of housing but contribute to regular housing bubbles.]

* The right to adequate medical care and the opportunity to achieve and enjoy good health. [Rehmke comment: I agree that access to medical care should be free. If it were, hundreds of thousands more people would quickly move into medical fields, being quickly trained to provide diagnostic services with support of sophisticate software and teleconferencing with doctors). Thousands, then tens of thousands of highly-trained doctors would move to America from India and Mexico (and tens of thousands more would gain access to training in those countries). Hundreds of thousands of trained nurses would move to America from the Philippines and Kenya. Incomes for many of today's doctors and nurses would drop, but services for the poor would expand. Wal-Mart and other firms would likely provide free or near-free medical services just to bring in customers (though they might expect a blizzard of malpractice lawsuits that activists would likely hit them with). "Enjoying good health" requires people exercise and eat healthy foods. This behavior would be encouraged if insurance companies were allowed to set catastrophic insurance rates on the basis of exercise, diet and other behaviors that influence medical risks. Government shouldn't hector overweight people to diet and exercise, but medical insurance premiums $100 or $200 a month higher, based on actuarial data, would provide strong and reality-based stimulus for active lifestyles and healthy diets.]

* The right to adequate protection from the economic fears of old age, sickness, accident, and unemployment. [Rehmke comment: the above suggested reforms would move Americans toward these goals. Sound currency would encourage savings just as unsound currency punishes saving for old age. Transfer-based Social Security and Medicare are unsustainable, so individual retirement accounts of some kind would provide the financial safety net that would provide adequate protection. Government tax policy distorts medical-insurance, and people should be allowed to opt-out of government welfare/social security programs.]

* The right to a good education. [Rehmke comment: A dose of freedom would improve education. James Tooley's excellent book "The Beautiful Tree" looks at successful private schools for the poor across Africa, India and other poor countries. If only America's inner-cities could enjoy the freedom to educate that the poor have in Latin America, Africa, India, and communist China. America's thriving homeschool movement is developing into hundreds of fast-growing firms offering a wide range of quality educational services, and innovative private schools are expanding too. Again, here as with other areas, entrenched elites operate and benefit from an expensive government education "monopoly" that offers mediocre or poor education with expensive, watered-down, politically-correct and colorful but boring textbooks.]

Mar

21

Mr Covel needs no introduction to DailySpec readers — he's remarked at length about Chair on his site, and vice versa. A few asides: GM Davies (!) is quoted at length on pg 99 [with attribution to DailySpec]… On pg 102 there's a discussion of quasi-Turtle Lucy Wyatt, who years later found her way to Chair's trading room, and shared some colorful stories about the proclivities of the trend-following greats… The Turtle trading "philosophy" and rules are discussed at length [as they are on the web also]; hint: buy twenty-day highs…

A smattering of highlights (with minor elisions), to give the flavor:

p 17/ Dennis told Willis, "If you're buying wheat and it's strong and the beans are two lower and the wheat is five higher, why don't you sell the soybeans instead of selling the wheat you bought?" It was a very sophisticated insight. In fact, buying "strength" and selling "weakness" short still befuddles investors.

p 18/ Dennis's attributing his height and weight as the reason he was successful is not the full story. There was more to becoming a millionaire by 25 than being "six foot something" and three hundred pounds plus. Even with excess weight, his peers described him as having cat-quick reflexes on the trading floor.

p 27/ Dennis knew the Turtles were "dumb stumps" and that the only reason they bought into everything was because he had made $200m. If he said "On Monday, you will buy the S&P when it's up exactly 35 ticks no matter what," all the Turtles would have gone over a cliff to follow orders. One Turtle said that when a guy has made $200m and he says "You can walk on water," people are going to say "Okay, I can walk on water."

p 45/ To those who saw them up close, Dennis had the capacity to make an observation in an instant that would take someone else weeks of painstaking math to figure out. Even Eckhardt marveled at Dennis's knack to intuitively see "it."

p 48/ One Turtle gushed in awe that Dennis still had the "balls" to execute that trade "when they were dumb, deaf and broke": "They were going the wrong way and for Dennis to just totally cover and totally reverse was amazing."

p 102/ All one Turtle could remember about Lucy Wyatt was that she was always doing her nails. Mike Cavalo said that Wyatt had been Eckhardt's girlfriend.

p 102/ Everyone knew Mondale was Dennis's guy. Dennis started going around the table asking everyone who he was voting for. One by one they all said "Mondale." They were his guests, and he was one of the richest guys around. However, when it was Gordon's turn he said "Gary Hart." Gordon knew he had just upset the trading king of Chicago.

p 126/ Keefer, who thought Dennis deserved a Nobel Prize for his real-world work in harnessing volatility in his trading models, lamented the allocations aspect of the program: "You've got somebody that's got an awesome trading system and he's following really rigidly good protocols about trend trading, and then he just literally blows it up on asset allocation."

p 129/ It was over. Dennis sent a fax telling the Turtles that the program had been scuttled. Dennis, who was managing money for clients, too, had two public funds with Michael Milken's Drexel Burnham Lambert. They closed down with big losses.

p 130/ Dennis himself simply declared he was retiring. He announced he would move full time into political causes. He wanted to take the wind out of what he thought were efforts to make "liberal" a dirty word.

p 131/ Lawsuits soon followed as former clients in the Drexel funds argued that Dennis had deviated from his own rules. Eventually, US District Judge Milton Pollack agreed to a settlement in which nearly 6,000 investors shared $2.5m and got half of Dennis's trading profits over the next three years. Under the settlement, Dennis and his firms did not admit any wrongdoing.

p 133/ In the book "Market Wizards," author Jack Schwager softened the blow to Dennis's tough times by entitling his chapter "A Legend Retires." Schwager's Dennis chapter became a cult classic.

p 150/ Dennis staged another remarkable comeback. It would take him through most of the 1990s. Many investors were gun-shy about another Dennis comeback. In an effort to allay client fears, he assured everyone that his infamous discretion, his inability to not personally interfere with his own rules, had been eliminated. He said the computer was his new friend.

p 151/ In some ways, Dennis was a technophobe in the middle of the Internet revolution. He always said he could not program.

p 151/ Within a few years, Dennis was out of the game again. On September 29, 2000, Dennis Trading Group ceased trading and liquidated customer accounts. Burt Kozloff, an investor in Dennis's current fund, laid out the painful truth: "Dennis Trading Group was -50% down in June."

p 152/ While it was no solace for Richard Dennis, the moment when clients pulled funds from him in the fall of 2000 was a bottom for trend-following traders. Dennis's clients had panicked at the bottom and paid dearly.

Michael Covel clarifies:

I did not have the opportunity to speak with Lucy Wyatt for my book, but I have talked with her extensively since its release. "Quasi" seems an incorrect description. She was a Turtle.

Dean Parisian recounts:

I was a salesman at Drexel Burnham Lambert in the 1980s and had clients in those RJD funds. The prospectuses put together for the RJD partnerships are to this day, the absolute finest, nicest, best-crafted marketing pieces produced. If ever there was a glossy, colorful marketing brochure this was it! One thing I will take with me to my grave stands out. In one of the calls that Richard Dennis gave to the Drexel brokers as to why his funds were being hammered and shuttered, he said, "the markets were behaving irrationally." Memory tells me they were designed to liquidate at a 50% drawdown and it wasn't more than a few weeks later that the markets he traded the funds in had reversed and skyrocketed upward. Only the lawyers made out big but it was the most equitable general partner / limited partner arrangement we had ever seen. Just another reminder to any brokers pitching partnerships to never forget the old saying, "on day one of a partnership the generals have all the experience and limiteds have all the money, on day two the generals have all the money and the limiteds are left with the experience."

Jim Sogi offers:

The Complete Turtle Trader by Michael W.Covel is an interesting tale of volatility in the trading and careers of Richard Dennis and his Turtle traders in the thin style of popular financial journalism. Vic and Laurel, Covel and the Turtle traders have had disagreements over the issue of trend following, however, I believe that there is more to the Turtle and Eckhart/Dennis systems than Covel discloses. He seems to have oversimplified the Turtle systems down to the two simple trendfollowing systems S1 and S2, systems that have been disclosed and sold years ago.

I discount those two specific breakout systems — they have not worked in the recent past on equity indices. See Linda Raschke's Turtle Soup pattern. Whether they worked in the mid 1980s I have not tested. Covel's failure to note the systems' failure in equity indices in the recent past and the implication that these systems might still be effective is very unfortunate for poor readers who might be mislead to lose more than they have any right to as a result.

There are more similarities between the Eckhardt/Dennis systems and Vic and Laurel's ideas than many who follow this dispute seem to understand. The similarities of Richard's and Vic's careers are more notable than their differences. Both came from modest backgrounds. Both undertook to give back to the community and to other traders. Both saw huge successes and notable drawdowns. I am struck by the launch to success enjoyed by those mentored by both Richard and Vic.

Richard Dennis used the scientific method, using empirical data and tests of hypothesis with computer models to create trading systems. Reading between the lines, it is apparent that the remaining successful Turtles use other systems and appropriate testing to create trades. Covel misses the significance of this most important point. The Turtles' money management alone might have proven a key element. Unless a system is profitable, money management merely postpones the eventual ruin. However the statistical analysis of money management is a necessary part of proper trading as our friend Dr. McDonnell shows in his excellent book.

Steve Leslie writes:

This encompasses so many things that have been discussed on this site for the years that I have been visiting it. My top ten list of what I learned from Mike Covel's book:

10) Those who are willing can be taught almost anything.9) Great people want to help others achieve great success.8) Success in business requires tremendous concentration. Outside distractions must be avoided.7) Sometimes it is best to leave politics to politicians.6) Everyone fails at some point in his life. The true winners rebuild after their failures.5) To put on a trade when everything is going against you requires character and commitment.4) Rules are rules. Stick to them.3) Adapt with the times. Be willing to be malleable.2) Always leave yourself outs. Never commit everything to one position or to one person.

And the number one lesson:

1) The market is bigger, stronger and badder than you. Always respect it for the beast it is.

Jan

9

There is no one else who is saying anything about it, so naturally I will. How about those Gators? Florida whipped the ever-loving bejezus out of Ohio State last night to become the BCS college football champions. I love it when the underdog not only wins, but it also does so convincingly. Having been an underdog most of my life, I love to see a team that is told that they simply can't do something, and actually go out and do it well … Well guess what? Just as high school drop outs aren't supposed to be able to achieve a level of success in the financial industry or have several articles and a book published, Florida wasn't thought to be worthy of even being on the field with the brutes from Ohio State. Crown them champions.

There are lots of trading, market and life lessons here.

1. As always, you should have an edge. Florida found the passing seam in OSU's zone defense and exploited it.

2. When it's clear that your edge is working, exploit it ruthlessly. Once Florida knew where the seam was, it pushed the point and went back to it over and over again.

3. Respond to adversity by attacking. When OSU's phenomenal player, James Ginn Jr., ran back the opening kick for a touchdown, Florida could have been demoralized by falling behind such a heavily favored team. Instead they got a runback of their own and calmly drove in for the score.

4. Play great defense. Florida's defense refused to make mistakes last night. The Heisman trophy winner was 4 of 14 passing for 35 yards and they could never get going. Protect your bankroll at all times. Don't be afraid to push it when you have the edge (the continual blitzing last night kept Smith running for his life), but not until you know you have the edge. There have been a lot of times in the past few years where playing good defense, such as having cash on hand and selling as the market went higher, allowed me to jump on opportunities that led to profits.

5. Loyalty counts. Florida's kicker, after being all SEC last year, has had a difficult year. They stuck with him. He booted two from over 40 yards. OSU's head coach, Jim Tressel, refused to allow Troy Smith take the blame for the loss, and instead took it all for himself. People remember things like that and think better of you for it.

6. If you do lose, be gracious about it. Learn from it. Nobody likes to lose but it will happen. Jim Tressel's post game interview was a lesson in the behavior of a gentleman. There is no doubt in my mind that he will review, learn from this and be back with a top ten program again next year despite the humbling nature of being beaten so badly.

7. Know when the risk is too great. When asked about Boise State, Urban Meyer stated that he loved those guys, but he wasn't going to play them. Boise, by whipping Oklahoma, proved that they are indeed a top flight school. Florida is relieved they don't have to do a one playoff game with that tricky high octane offense.

8. When the odds are against you, study, prepare and believe in yourself. Nobody thought Florida had a chance, and that could have demoralized the gators. Instead they were there to prove a point. They practiced, and they studied film (no one else found the seam in the zone all year, so they studied hard). They believed, they studied, and they worked. Call them a champion.

Michael Covel comments:

These are all good points. But was Florida really an underdog? Or were sportswriters in love with OSU, Michigan and Notre Dame all year to the exclusion of SEC schools? LSU had the speed to whip OSU too. Speed is the dividing line. Over the last 30 years, speed has generally been located in Florida schools and the SEC schools.